Most Homeowners Unaware of Lender Help, Freddie Mac

NEW YORK (Reuters) - January 31, 2008 - More than half of homeowners delinquent on their mortgages said they didn’t know lenders could help them avoid foreclosure, according to a survey released on Thursday.

The survey found that 57 percent of the 2,411 homeowners polled were unaware of “workout” options, which include new payment plans and new contracts with easier terms, Freddie Mac and Roper Public Affairs and Media said in a statement.

Borrower awareness improved only slightly from 61 percent in 2005, the last time Freddie Mac conducted such a survey, despite efforts by lenders, mortgage servicers and counselors to make contact, according to the survey.

With mortgage delinquencies causing unprecedented losses, financial institutions have said they are more willing to accept lower loan revenue by easing terms to borrowers.

“Too many at-risk borrowers are still unaware their servicers routinely provide alternatives that can help them stay in their homes,” said Ingrid Beckles, Freddie Mac’s vice president of servicing and asset management, in a statement.

Loan servicers were unable to contact borrowers in more than half the foreclosures seen at Freddie Mac, she said.

The Hope Now initiative of lenders, servicers and counselors has encouraged borrowers to approach their lender, the survey said. Nearly 1 in 4 delinquent borrowers reported seeing the Hope Now advertisements, though just 9 percent said they made the call.

Hope Now this month said the industry has helped 370,000 strapped homeowners avert foreclosure in 2007 through new payment plans and loan modifications. But foreclosure filings still surged by 75 percent last year and Wall Street analysts still forecast rising losses on mortgages in 2008.

Some responses from borrowers appear to contradict the Freddie Mac/Roper poll’s overall findings.

Some 86 percent of delinquent borrowers reported that their lenders has made efforts to contact them, up from 75 percent in 2005. The percentage of borrowers that contacted their lenders increased to 75 percent from 68 percent.

Of delinquent borrowers surveyed, 63 percent said they knew about repayment plans, while 68 percent said they were aware of changing an adjustable-rate loan into a fixed-rate mortgage, the survey said.

Borrowers were dubious of contacting their lenders. Of the homeowners contacted, 83 percent said financial institutions were a hassle to deal with, while 75 percent felt the mortgage companies don’t want to help struggling borrowers.

Freddie Mac is the second-largest provider of financing for U.S. home mortgages. The McLean, Virginia-based company purchases loans for its own investment, or guarantees payments on mortgages packaged into mortgage securities for sale to investors, including itself.

Most homeowners unaware of lender help: Freddie Mac
By Al Yoon | Reuters